chapter 7

HOW TO CHOOSE A BUSINESS LOCATION

Just as with naming your business, finding a place to effectively operate is a personal decision. Working out of your home might suffice for a writer or private consultant; however, if you're aspiring to start a restaurant or salon, you may need to look elsewhere.

As always, part of picking the perfect office is purely subjective. Everyone has their own ideas about what makes a good work environment—be it simply a quiet place to work undisturbed or a more modern-industrial style to inspire creativity.

Location, Location, Location

The non-subjective part of picking an office, however, needs to be a focus, too. Before you buy or rent any space for your business, you should be absolutely sure that you'll be able to operate there effectively in terms of your marketing strategy and your local zoning restrictions.

For a restaurant or similar type of service, you'll need to consider how the locale fits into your business plan. Location affects the visibility of your business. After all, it can be a lot harder to find customers if they can't find you. The economic practicality of office location should be a concern if you plan on running any sort of brick-and-mortar operation that needs to attract customers.

Beyond economics, you also need to be sure that any area is zoned to allow your business. Even if everything else about the place is perfect, it won't do you much good if you're not legally allowed to run your business there. While zoning and neighborhood restrictions can be argued, it can be a difficult process—and one that may ultimately end against you—so do your homework.

estate-planning-tips
STARTING A BUSINESS FACT
"More than half of all U.S. businesses are based out of an owner's home"

Renting Office Space

Property is expensive; and depending on where you plan to set up shop, it may be a better idea to rent office space. If that sounds familiar to renting an apartment, it is; however, you should be aware that commercial leases can be much different. This isn't to say that commercial leases are unwieldy; simply that you'll have other concerns and priorities when you enter into one.

First, unlike residential leases, commercial leases may last much longer—sometimes up to 5 or 10 years. This is generally a good thing because, unlike when you move personally, moving a business means a lot more than sending out a moving announcement and forwarding your mail. You will also have to invest in marketing your new locale and rebuilding your customer base. With that in mind, a longer lease term may be great, but new businesses should still be careful. Leases are legally binding contracts; so if your situation changes, you should be sure that you're not stuck with something that you can no longer handle.

Second, commercial leases typically involve more negotiation. This can include anything from the lease term, termination clauses, or how much upkeep you are expected to take care of as the lessee. Not just that, but you can contract for just about anything—so if you have concerns, be sure to address them.

As you can imagine, however, there are certain terms that will appear in just about any commercial lease that you should pay close attention to. You should have a clear understanding of these points:

  • Lease term: When the lease begins and how it ends

  • Early termination: Can the lease be ended early, and if so, how? Which parties can exercise this ability?

  • Rent: Not just how much you're paying, but how much it can increase year over year

  • What is being leased: Your office space may be attached to others or part of a larger office, so be sure that you know what you're getting in terms of shared space and storage—in addition to what your maintenance responsibilities will be.

  • Maintenance: Once you know what you're getting, you should know how much you're expected to maintain. Just your area? Common areas, too?

  • Net leases (insurance, property tax, maintenance costs): Who pays for all of this? Is everything included (gross lease), or are you expected to cover all three (triple net lease)?

  • Advertising: Are you allowed to post signs? If so, where and what are the limits?

Above all else, take careful stock of your finances if you're looking to find an office. Whether you're buying or renting, adding property to your business is a big investment so be absolutely sure that it's both within your means and the best choice available.

Regardless of which avenue you pursue, be sure to take advantage of the financial opportunities that come with it. Improvements to property could turn into into tax write-offs—even the humble home office is eligible for tax credits.

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